"Most apps show transactions in a purely linear format, it's just a long list," O'Brien explained, adding that millennials seek a more intuitive look and feel as opposed to one big stack of transactions.

O'Brien also detailed the following insights from the focus group:

• When users interact with many nonfinancial apps, they feel in control due to features such as tap-and-drag and interface management capabilities.

• Millennials want a crisp and user-friendly banking experience that is not provided by most financial institutions today.

• Sixty percent of interviewees indicated their app information needs updating more frequently than every 24 hours.

• Sixty percent of millennial users in the credit union space indicated an app that only worked with a single credit union account would not appeal to them. They want to be able to access all their accounts, even those at other financial institutions.

O'Brien emphasized, "They are not comparing your features to other financial institutions. They are comparing you to other apps like Uber where the user experience is key and innovative."

Financial institutions have an opportunity to close the gap, however.

"There is a lot of opportunity to try and reengage those users who may have abandoned financial institution apps," O'Brien said.

Rapid member expectation changes driven by nontraditional competitors requires credit unions to think innovatively, according to Andrew Downin, managing director of innovation at the Madison, Wis.-based Filene Research Institute.

The independent financial think tank is trying to spur transformation through its Filene i3 innovation program, which is designed to help credit unions build operational efficiency, generate loans, mobilize savings, reach communities and strengthen membership.

The program typically accepts 15 applicants each year. There are approximately 30 active Filene i3 innovators at any given time, and each volunteer makes a two-year commitment.

Through virtual discussions, collaborative fieldwork and self-study, Filene i3 innovators from the U.S. and Canada create possible solutions.

"Part of what we teach the i3ers is the Filene method of innovation," the Filene managing director said. "That philosophy briefly states that any innovation, any new change brought to market has to start with solving problems for end users."

Downin explained before each i3 group moves forward, it gathers insights, which may include comments overheard from members, trends in other industries that may be applicable to financial services and common consumer problems.

"It boils down to having your peripheral vision open, to always looking beyond the obvious," he said.

During each i3 cycle, which lasts six months, Filene identifies two or three concepts with the most promise and moves them into the Filene incubator. The firm, which owns the intellectual property of the ideas, often collaborates with a developer or vendor to create and test the concepts across eight to 10 credit unions.

Currently, Filene has a catalogue of 200-plus ideas that came out of i3 over the last 12 years. However, very few of these ideas are in use at credit unions or commercially successful.

"It is a pretty small number, it is in the single digits – five to seven," Downin admitted. "That is typically the way innovation works. You have to throw many darts to get one bull's eye."

He added, "Even if one of the concepts they come up with during a six-month cycle has the potential for being implemented, Filene considers that a success. Part of what I see i3 bringing as an advantage to the credit union industry and movement is that we can bring credit unions together to kind of pool some of the risk."

There are two i3 products that are currently in two different stages of availability to credit unions.

The first is Boost Savings, which helps members handle unplanned expenses while still encouraging them to build long-term savings. Members who are enrolled in the program are given access to a line of credit. Boost is ready to be utilized by credit unions.

The second, Centsus, is currently in the incubation phase and awaiting credit unions to conduct prototype testing. The product uses a web-based tool and allows consumers use emoticons to rank how they feel after spending, making them aware of how financial decisions impact emotions. Filene is seeking credit unions interested in testing Centsus.

"When you think of innovation from a technological viewpoint, Centsus is one of the ideas I'm most excited about because it's taken technology and financial decisions and paired them up with a concept we don't talk often about in the world of finances – emotion," Downin said.

Filene and Visa also joined forces to help credit unions reach the underserved through a Reaching Minority Households incubator.

"Credit unions can play a more active role in improving the financial lives of their members and the 50 million underbanked consumers in America," Downin said. "We're testing products that not only have the potential for life-changing personal impact but that can also provide long-term sustainability for financial institutions."

Filene is testing the following five programs as part of the Reaching Minority Households incubator:

• Data Mined Auto Loans, developed with the National Credit Union Foundation, helps identify minority members with either a high-rate auto loan or no auto loan at all.

• Community Microfinance Small Business Lending from the $4 billion, Ottawa, Ontario, Canada-based Alterna Savings and Credit Union, pairs loans with financial education and promotion of businesses via community boards in credit union branches.

• The Non-Citizen Lending Program from the $93 million, Portland, Ore.-based Point West Credit Union, offers a variety of lending products, including credit cards, personal loans and vehicle loans, to non-citizens at the same rates as traditional consumer lending products. From 2008 to 2015, the program provided $2.1 million in loans to non-citizen borrowers.

• Payday Payoff Installment Loans, developed by the $3.8 billion, Manhattan Beach, Calif.-based Kinecta Federal Credit Union and Nix Neighborhood Lending, provides affordable and responsible loans for underserved communities using an alternative data underwriting model. Borrowers can consolidate up to $2,500 of high-cost debt into an affordable installment loan.

• QCash, launched in 2004 by the $2.4 billion, Olympia, Wash.-based Washington State Employees Credit Union, is designed to meet the short-term lending needs of members requesting large money orders to pay off payday lenders. QCash offers relationship-based underwriting to members without a credit check. When using QCash, an omnichannel solution, members can get funding in less than 60 seconds using a smartphone.

Overall, Downin said he believes there are cultural barriers at many credit unions preventing them from being more innovative, beginning with an aversion to failure. Other credit unions waste time, money and resources trying to build a perfect product instead of creating a prototype quickly and testing it with a focus group. Another innovation barrier is overconfidence, he said.

"Some credit unions feel the way they did business five years ago is exactly the way they should do business today," Downin concluded.